Ontario Superior Court of Justice Files Class Action Lawsuit Against Binance for Alleged Securities Violations
The Ontario Superior Court of Justice has taken a decisive step against cryptocurrency exchange Binance, filing a class action lawsuit alleging the sale of crypto derivative products to retail investors without proper registration, in violation of securities laws. This latest legal trouble adds to a series of challenges Binance has faced with Canadian regulators in recent years.
The lawsuit, seeking damages and rescission of trades, accuses Binance of failing to comply with necessary registrations and prospectus filings as mandated by securities regulations. The court highlighted that the sales of these products were deemed illegal and void due to lack of required registration.
In certifying the class action, the court acknowledged that crypto contracts are considered securities or derivatives under current regulations, with their marketing classified as distribution. The decision emphasized that the plaintiffs had provided sufficient evidence to establish common issues across the class.
Binance had previously come under fire from Ontario courts for operating its platform in Canada and catering to Canadian users. Following regulatory scrutiny from the Ontario Securities Commission (OSC), Binance initially pledged to cease dealings with Canadian investors in 2021 and began winding down operations in Ontario by early 2022. However, the exchange later reversed course, citing authorization as a money services business to continue operating in the province.
The court dismissed Binance’s argument that it merely facilitated trades between investors, asserting that the contracts were between class members and Binance itself. This likened the relationship to that of a customer and a store, rather than independent parties.
The court’s ruling sets the stage for the assessment of damages, interest, and costs on a class-wide basis, allowing all investors who purchased cryptocurrency derivative contracts from Binance since September 13, 2019, to join the class action. As the legal battle unfolds, the cryptocurrency industry awaits further developments in this high-stakes case.
